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New York Forex Report: Sterling Losing Its Shine

New York Forex Report: Sterling Losing Its Shine

New York Forex Report: The USD is trading generally bid through the European session. Although ranges remain contained, market volatility seems to be picking up slightly. The USD is trading firmly against all of its G10 peers outside of the JPY this morning as weaker stocks provide the JPY with a safe-haven bid. GBP is a middling performer on the day but the air is leaking out of the recent rally as traders perhaps take another look at inflation risks resulting from the GBP’s slide (BoE in no rush to tighten) and the ongoing focus on the fate of financial services in the UK following the Brexit decision. UK construction PMI undershot consensus expectations modestly in March (52.2, versus 52.5 expected)

USD Expansion in the US manufacturing sector remained healthy despite the pullback in both ISM and Markit manufacturing index in March. ISM manufacturing pulled back from its 30-month high reading of 57.7 in February to 57.2 in March due to the pullback in production, offsetting stronger new orders and new export orders. Reflecting more subdued expansion, final Markit manufacturing PMI print came in at 53.3 compared to 54.2 in February.

EUR Eurozone’s data continued to depict sustained recovery in the 19 bloc nation. Markit manufacturing PMI rose to a record high of 56.2 in March (February: 55.4) as global demand strengthened. Factory gate inflation climbed 4.50% YoY in February, its quickest pace since November 2011 and matched a three-year high CPI reading of 2.00% YoY in the same month. Euro remains pressured ahead of this evenings French Election debate.

GBP UK Markit manufacturing PMI slipped to a four month low of 54.2 in March (February: 54.5) as Britain prepared for Brexit negotiation. This week’s remaining releases include Wednesday’s services PMI and Friday’s industrial production figures. Measures of sentiment are supportive of the ongoing moderation in implied volatility, softening the premium for protection against GBP weakness.

JPY Japan’s monetary base increase at a slower pace of 20.3%y/y in March (from 21.3% in February) to JPY447.3trn end-of 1Q. BoJ’s Kuroda today reiterated his dovish stance, saying that “it is premature to discuss an exit strategy from the central bank’s aggressive easing policy”. However BoJ and government advisers have been floating the idea of how to move away from yield curve control.

Technical: 1-3 Day View – 1-3 Day View – The breach of 1.07 support resets a downside bias with 1.0570 symmetry swing support the immediate downside objective, near term resistance is sited at 1.0738, over 1.0860 opens 1.0969 equidistant swing objective.

Technical: 1-3 Day View – 1.2570 upside objective achieved potential for profit taking pullback to test support sited at 1.24 as this area supports expect a test of triangle resistance sited at 1.2640 only below 1.2370 concerns near term bullish bias.

1-3 Week View – While below 1.2864 bears set sites on 1.10 as the broader downside objective, a weekly closing breach of 1.2660 will set up a move to test the weekly bearish line in the sandRetail Sentiment: BearishTrading Take-away: Long

Technical: 1-3 Day View 111.75 range support breached the daily close below here suggests downside range break and opens 108.43 equidistant swing objective to the downside, near term resistance is sited at 112. A daily close over 112 stems near term selling pressure.

1-3 Week View – as 110 weekly symmetry swing support survives on a weekly closing basis bulls will look for a grind higher to retest 115, a close below 108 which represents an equidistant swing from the cycle, negates the broader bullish theme.Retail Sentiment: BullishTrading Take-away: Short

Technical: 1-3 Day View – 118.22 achieved bears now focus on the next downside objective of pivotal symmetry swing support sited at 117.69. Only over 120.50 arrests near term selling pressure.

1-3 Week View – As symmetry swing support sited at 117.69 survives on a closing basis bulls will continue to target weekly symmetry swing resistance sited at 124.42, a weekly close above here would set a broader base for further upside.Retail Sentiment: BullishTrading Take-away: Short

Patrick has been trading for the past ten years. After liquidating several accounts in his early days he stopped 'gambling' and applied himself as a student of risk. Self taught and more self aware thanks to Mr Market. Patrick applies simple technical strategies based around market price and time structure to identify high probability trade locations.